On August 12th, the 3DS’ price will drop from $250 to $170. That’s a $80 price drop within four months of launch. Nintendo made a killing selling the Wii at a profit from day one, however, they are reportedly now losing money on their portable system.
In addition to this, Nintendo announced that they had to cut their profit forecast by 82%. The system has only sold 830,000 units to date. As the successor to the DS which sold close to 150 million units, Nintendo was certainly expecting a more successful first four months. Pressure from retailers looking to unload excess product and in an attempt to bolster poor sales, Nintendo decided the time was right to lower the price.
All the news was not bad for early adopters as Nintendo, in an effort to reduce buyers remorse, announced a Nintendo Ambassador program which will give current users 20 free games. These games will come from their new NES and Game Boy Advance Virtual Console service. It is not known if gamers will get to choose their 20 games or if they will be chosen by Nintendo. So far the games that have been announced have been Super Mario Bros., The Legend of Zelda, Ice Climber and Balloon Fight for the NES and Yoshi’s Island: Mario Advance 3, Mario Kart, Metroid Fusion, Wario Ware, and Mario Vs. Donkey Kong for the Game Boy Advance. These games will be available on September 1st and they will not be immediately available to the general public.
The final piece of news from the day was that Super Mario Land 3D will release in November and Mario Kart 7 will release in December. This joins Star Fox 64 3D (September) and Kid Icarus Uprising (holiday) as major Nintendo releases in 2011.
As the only member of the Now Loadin’ crew to buy a 3DS on launch (or have any interest in the system at all) I’m here to present my feelings on the news. In short, it’s bad. The 3DS is not performing the way Nintendo expected it to and I’m hoping the price cut can help them turn this around. I’m not enraged by the price drop- as an early adopter you know that sooner or later the technology you buy will drop in price (ask any day one PS3 user about that). The fact that Nintendo, whose main business strategy over the last 15 years has been selling us re-releases of old games, decided to give me 20 free games in pretty remarkable. To be honest I was excited to hear about the NES virtual console making it to the 3DS. I hope Punch-Out is out soon (or included for free) because I’ve wanted to play Punch-Out on the go for a long time now. So personally, I worry more about the long term viability of the console at this point. Being upset at a price drop is pretty useless.
In addition, this should come as great news to any consumer waiting to buy the 3DS. $170 is a much more affordable price point and with a bunch of great games coming later this year, it is now a great time to buy the system. The only people this is truly bad news for is Nintendo as they are losing billions of dollars. Sony may not have enjoyed the news either as they knew that going up against the 3DS at the same price point as the Vita would have been a great competitive advantage.
Regardless, the news was terrible for Nintendo as they were counting on strong 3DS sales to bridge the gap between the Wii and the Wii U. So why exactly is the 3DS failing? What did Nintendo do wrong and what can they do in the future to turn things around?
Changing Marketplace
The marketplace has shifted since the DS was released and experienced unprecedented handheld success. No longer content to have a handheld gaming machine, gamers now have handheld computers. iPhones and Droid powered phones allow you to surf the Internet, check your e-mail, check Facebook, and even play games. I tend to downplay the effect of actual gaming on your phone in that gaming on an iPhone sucks. I’ve found three games worth playing on my iPhone: Tiny Wings, Arkanoid, and Carcassonne. The issue, however, with even the best games is that they’re not entertaining to play for more than fifteen minutes. The fact is, however, as I rode home on the el today I didn’t play Zelda on my 3DS, I read about the 3DS on my iPhone. The reason for the 3DS’ failing seemed to be staring me right in the face.
Children are fickle bastards and the kids’ market cannot be ignored in this discussion. While I haven’t seen any actual research done in this area, I have heard multiple anecdotal stories about kids who own a DS who have shown little to no interest in the 3DS. The iPhone or iPhone touch seems to have taken over as the new hot toy. If Nintendo can’t convince the kids who bought a DS to buy a 3DS the system will fail. A large portion of their market is younger kids and they need them to convince the parents to run out and buy the toy.
Poor Launch
The launch of the system was terrible. It seems Nintendo, struggling with declining Wii sales decided to release their system seven months early. In hindsight, with those extra months of marketing muscle Nintendo could have set themselves up for much greater success. The only Nintendo titles at launch were Pilotwings Resort, Steel Diver, and Nintendodogs + Cats. Let’s pretend the system launched in September with Super Mario Bros. and Pilotwings and then by the end of the year they could release Mario Kart, Star Fox, Ocarina of Time, Kid Icarus, Pilotwings, and Nintendogs. Honestly, they could save some of those for the early part of 2012.
Not a System Seller
The price was also a huge miss. It seems clear that $199 was the price they needed to get to and they felt the Nintendo name could sell the system at the higher price. When Playstation Vita was announced at the same price at E3 this year, Nintendo knew it wouldn’t be able to compete. $250 for the Vita is a great price considering the power in the system and Sony has never been afraid to lose money out of the gate with their systems.
The other major issue is the lack of software available on the Wii. Third party publishers have moved to the Playstation and Xbox where they can show off the best graphics and utilize the most powerful systems on the market. Curiously, however, Nintendo could have localized The Last Story, Xenoblade, and Pandora’s Tower and solved the lack of software problem somewhat.
An additional problem is that the terrible launch has started to scare away third party developers. When the 3DS was announced at E3 it seemed that every third party developer on earth was developing something for the system. The the last couple of months, however, these developers have been delaying and canceling games. Granted most of these games looked like they would suck but early this week news broker that Metal Gear has been delayed until 2012. Nintendo has proven that it is extremely difficult to have a successful system without a lot of support from third party developers. The poor sales have obviously strained those relationships.
Poor Vision
Despite the glowing previews the 3DS received when it was shown off at last year’s E3, I feel that it is now fair to question the direction Nintendo went in by introducing the handheld market to 3D technology. Nintendo has widened its audience to include people that very well might be scared off by the 3D effect. I can see an elderly person, for example, having trouble with the 3D aspect of the system. Also, there are people with astigmatism that have trouble seeing the 3D or get headaches when they try to play the system (Chas for example). A bigger issue is that 3D has yet to prove itself as a medium. The only thing I’ve seen in 3D that I have then bragged to others that they NEED to see in 3D is Avatar. Nintendo certainly hasn’t developed a game that must to be played in 3D. If you have a great new feature in your system you need to show why you feel it’s so cool.
This is what Chas’ eye looks like.
Stale Franchises
The last reason for Nintendo’s failure is their lack of innovation. While I’m happy to continue playing Mario, Zelda, and Metroid games, there are other gamers who have tired of these franchises. So far, the 3DS’ best game is The Legend of Zelda: The Ocarina of Time HD remake. This is a straight port of a 15 year old game. While playing it, it’s easy to see the distance that games have come in those 15 years. I still enjoy playing these games but it used to be that Nintendo was on the forefront of innovation, technology, and gameplay. While Nintendo continues to innovate on the hardware side, the last 5-6 years have been a great disappointment from a software point of view. On one hand Super Mario Galaxy 1 and 2, Twilight Princess, and Metroid Prime 3 among others are right there with the best games of this generation. On the other hand, the last great new franchise they created was Pikmin which is now 10 years old and we haven’t seen a new entry in over 8 years. At some point the profits will dry up from selling remade and rehashed copies of the same games and Nintendo will have to innovate once again. I’m hoping that is the lesson they will learn from these two disappointing years. I’ve always said that I don’t expect Nintendo to deliver what Sony and Microsoft do, but I still want unique and different gameplay and I want great Mario, Zelda, and Metroid games. A little innovation won’t hurt either.
Looming over this news is obviously the Wii U which is due out next year. Like the 3DS, Nintendo is not following the market. This isn’t new for Nintendo, they took a huge risk and it paid off with the Wii and the DS. But with that possibility for success comes the chance for failure. The 3DS isn’t dead yet but it’s in big trouble. They still have plenty of time to turn things around as their big name games are slotted for the end of the year. With a much more reasonable price point, parents will be more willing to buy the system. Gamers will be more anxious to pick up a 3DS when better games are released on the system. The next six months will be interesting to see how they recover from a terrible start and what happens will have a large impact on how they move forward with the Wii U.
I know we don’t have a lot of pro-Nintendo readers on the site, but I’m curious to know what you’re impressions were of this news. Does the price drop change your feelings on the system either personally or regarding the 3DS’ place in the videogame landscape? Feel free to post your comments below.
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August 1, 2011
I’m not surprised at all that the 3DS failed. Anyone who is interested in buying a 3DS probably already has a DS. Why spend an extra $300 for a gimmick like 3D gaming? Or to be able to play 15 year old game ports? OUT.